Investors looking for strong dividend returns in 2024 have several appealing options across various sectors. Recent analyst reports and market trends point towards continued momentum for several high-yield stocks with histories of dividend growth.
Oil Giants Offer Stability and Income
The energy sector is home to some of the market’s top dividend payers. Oil giants like Chevron and ExxonMobil offer investors above-average dividend yields along with share repurchase programs that help boost returns.
As reported by The Motley Fool, Chevron raised its dividend by 6% in 2022 while also significantly increasing share buybacks. The company expects to repurchase $15 billion in stock in 2023 while also benefiting from high oil prices. Investing $125,000 in These 4 High-Yield Dividend Stocks Could Make You Rich highlights Chevron’s 3.9% dividend yield and 26 consecutive years of dividend growth.
Meanwhile, ExxonMobil offers a robust 3.7% dividend yield and increased its dividend in 2022 for the 40th consecutive year. The integrated oil giant buys back billions in stock annually, with plans to repurchase up to $30 billion in shares through 2023.
With strong cash flows and shareholder return programs focused on dividends and buybacks, energy giants like Chevron and ExxonMobil look poised to continue rewarding income investors.
Defense Stocks Provide Recession Resilience
The aerospace and defense sector is another source of steady dividends, as stocks like Lockheed Martin and Northrop Grumman generate stable revenue streams. These defense titans pay well above-average dividends and have lengthy histories of frequent dividend raises.
As detailed by Zacks Investment Research, Lockheed Martin offers investors a 2.7% yield along with 18 consecutive annual dividend increases. Meanwhile, Northrop Grumman yields 1.5% and has increased its dividend for 18 straight years. 5 Unbeatable Dividend Growth Stocks for 2024 notes that stable U.S. defense spending supports these stocks through varied market environments.
With investors bracing for potential economic turbulence in 2024, defense stocks stand out for their resilience and consistent income generation backed by long-term government contracts. This makes names like Lockheed and Northrop appealing selections for dividend portfolios.
Surging Financial Stocks Offer High Yields
While interest rates are expected to peak in 2024, analysts see more upside for financial stocks that benefit from higher borrowing costs. Banks and insurance firms like Prudential Financial and MetLife provide above-average yields along with dividend growth potential.
As reported by Seeking Alpha, Prudential hiked its dividend by 12% in late 2022 amidst rising policy retention rates. My Top 3 Stock Picks 2024 notes that higher rates will boost the insurer’s net investment income over the next two years. Prudential offers investors a sizable 4.9% dividend yield.
Meanwhile, MetLife raised its dividend by 5% in 2022 and bought back $1 billion in stock. The firm anticipates $1.5-to-$2 billion in share repurchases annually through 2024. Trading at just 7 times forward earnings, Seeking Alpha notes that investors can pick up shares of MetLife below book value.
With dividends poised to move higher alongside earnings growth, analysts view financials as a source of both income and price appreciation potential as 2024 unfolds.
| Stock | Sector | Dividend Yield | Payout Ratio |
|---|---|---|---|
| Chevron | Energy | 3.9% | 59% |
| ExxonMobil | Energy | 3.7% | 61% |
| Lockheed Martin | Aerospace & Defense | 2.7% | 88% |
| Northrop Grumman | Aerospace & Defense | 1.5% | 18% |
| Prudential Financial | Financials | 4.9% | 41% |
| MetLife | Financials | 3.1% | 28% |
BAT Offers Value and 8% Yield
In the consumer staples arena, British American Tobacco (BAT) stands out as a high-yield play on an out-of-favor tobacco stock. Trading at just 6 times forward earnings, BAT offers value hunters an 8% dividend yield backed by over 20 years of payout growth.
As BNN Breaking News reports, BAT generates significant cash flow to support its dividend. The company aims to pay out 65% of profits in dividends, a rate that British American Tobacco: A Potential ‘Golden Egg’ For Passive Income Investors notes is sustainable despite long-term smoking declines in Western markets. BAT sees opportunities to grow its non-cigarette portfolio of vaping, tobacco heating products, and modern oral nicotine.
With a rock-solid balance sheet and globally diversified portfolio of tobacco products, BAT offers substantial income and value relative to its defensive consumer peers. The stock’s outsized yield and discounted valuation could make it a golden egg for yield-focused investors.
REITs Deliver Growing Dividends
For investors seeking large, monthly dividend payouts, real estate investment trusts (REITs) stand apart from traditional stocks. As Contrarian Outlook reports, REITs must pay at least 90% of taxable income to shareholders in dividends, resulting in yields of 5-10% being common.
Analysts specifically highlight retail and residential REITs as growth candidates for 2024. Shopping center landlord SITE Centers yields nearly 7% and has a strong track record of consecutive dividend increases and special payouts. Meanwhile, residential REITs like Camden Property offer smaller yields around 3% but benefit from rising apartment rental rates and lean into growth via property acquisitions.
With high, consistent yields and inflation protection through rental rate increases, REITs look poised to drive investor income higher in 2024. Contrarian Outlook notes that stocks like SITE Centers trade at discounts and anticipate 5-10% price upside this year to accompany their generous dividends.
What’s Next for Dividend Stocks?
Looking ahead, dividend stocks appear primed to continue rewarding income investors in 2024. However, a potential economic slowdown could impact payouts over the longer term.
For now, factors like strong corporate profitability, higher interest rates, and potential tax reform look supportive. Barron’s notes that over 80% of S&P 500 companies raised dividends in 2022 amidst the market volatility. Firm dividend coverage ratios near historical highs provide companies flexibility to keep hiking payouts this year.
If economic headwinds eventually surface, defensive stocks like consumer staples and utilities would likely face less pressure on dividends relative to financials and cyclicals. Still, across sectors, cash-rich companies with the ability to maintain both dividends and buybacks through varied market environments will remain most appealing to investors focused on income and total returns.
To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.
